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GOOG Sliding In A Positive Market
Stocks are trading in the positive on better-than-expected earnings from Johnson & Johnson and Goldman Sachs, even though the markets took a hit yesterday because of the downgrading of the U.S. debt. Shares of Google are down about 0.65%, while the rest of tech also faltering. Upcoming catalysts include continued Android momentum; regaining ground in China and pushing into other emerging markets; updated software, adoption and media partners for Google TV; and progress in other newer initiatives (+1, location-based services, music-service, mapping, gaming, etc.). The stock trades at approximately 12x Enterprise Value / EBIT, inexpensive relative to peers and historical trading levels. Check out the newly updated model, complete with charts and valuation here.
Page Didn’t Give Investors Enough Air Time (Bloomberg)
Google investors say they got scant reassurance from new CEO Larry Page during last week’s earnings conference call. He spoke for less than 2 minutes and 30 seconds. Page, who wasn’t originally slated to speak on the call, said he was pleased with first-quarter results and that there was strong momentum at the company. While it’s too early to tell how well Page is performing, he could have helped investors with a broader discussion of the company’s perspective on spending.
Don’t Worry About The Bad Stuff, Google Has More Upside Than Downside (Forbes)
Despite rising costs and tighter margins, there’s more upside than downside for Google.
- Caris & Co analyst Sandeep Aggarwal highlights Google’s “massive growth trajectory in non-core” which he believes could deliver 45% to 50% CAGR in the next three years, generating about $5.05 billion in revenue and $5 in EPS for 2011.
- Bank of America Merrill Lynch’s team adds that “display advertising and YouTube monetization provide the biggest near-term opportunities” and that they believe expense growth to have peaked. Margins will recover and they believe the third quarter to be Google’s time to shine, where they will outperform its peers.
There’s also valuation. Google is trading at 9.5x 2011 EBITDA with a 17x long-term growth profile.
Google Having A Hard Time Getting Its iTunes Competitor Off The Ground (All Things Digital)
With Amazon having just launched its Cloud Drive digital locker product and Apple rumoured to be on the verge of introducing a cloud-based music service of its own, the last thing Google needs is a new barrier in its negotiations with music labels. Google has been working since last year to roll out a music service that would also integrate with the company’s Android platform. The company knowingly shipped a limited service, without mobile-to-cloud syncing, but did so without the explicit permission of labels.
Google Kills Tags In favour Of Boost For Small Local Businesses (TechCrunch)
Google is killing Tags, an advertising product for local businesses which allowed them to enhance their Google Maps or Places listings. Tags was an experiment which led to a similar local advertising product called Boost which appears do be doing much better, judging by how much it is now appearing in search results. Boost ads are all of those blue-coloured pushpins on Google Maps and in paid search results. These are much more useful, especially in mobile search.
More Clean Tech Investments From The Search Giant (CNet)
Google recently invested approximately $100 million in the Shepherds Flat Wind Farm, anticipated to be the largest wind farm in the world. The deal brings Google’s total investment into clean energy sources to more than $350 million. Read more at Business Insider.
Daily Trader: Google’s A Buy Because It’s Socially Conscious (The Motley Fool)
Not sure I’d base a holding on that, but OK. There are plenty of purely financial reasons to covet Google. It’s highly profitable, consistent revenue growth, a ton of cash, with a PEG ratio of a mere 0.92x. More importantly, Google tries to do many things in a positive, purposeful, and forward-looking manner.